Rat and chicken HMG-CoA reductase activity can be modulated in vitro by a phosphorylation-dephosphorylation reaction sequence. A microsomal reductase kinase from liver catalyzes the phosphorylation of HMG-CoA reductase and histones. Histone and HMG-CoA reductase phosphorylation was enhanced by cyclic AMP. Stimulation of phosphorylation of cAMP was blocked by protein kinase inhibitor. Incubation of reductase kinase with phosphoprotein phosphatase resulted in a time-dependent decrease in the ability of reductase kinase to catalyze the phosphorylation of histones and HMG-CoA reductase. Incubation of phosphoprotein phosphatase inactivated reductase kinase with (gamma 32P)-ATP plus Mg plus 2 and a partially purified protein kinase designated reductase kinase kinase resulted in a parallel increase in (32P) protein-bound radioactivity and decrease in the ability to inactivate HMG-CoA reductase. Incubation of (32P) labeled reductase kinase with phosphoprotein phosphatase resulted in a time-dependent loss of protein-bound radioactivity and decrease in the ability to inactivate HMG-CoA reductase. Polyacrylamide gel electrophoresis of (32P) reductase kinase revealed that all radioactivity and enzyme activity was located in a single band.